Providing Tax Defense for Individuals and Businesses in Florida Facing IRS Audits
Have you recently received a letter from the IRS notifying you that your tax return has been selected for a tax audit? If so, IRS Audits are serious business and it’s highly advisable that you act quickly to secure competent legal representation. Even if you have nothing to hide, don’t attempt to communicate with the IRS on your own. An Internal Revenue Service Auditor is trained to ask probing questions that may lead to you inadvertently incriminating yourself. Even the slightest misstatement on your part can turn a simple audit into a more expansive investigation beyond the initial items selected for audit.
At the end of an audit, the best case scenario is that you receive a refund or you owe nothing. It’s also possible for the IRS to impose additional tax, penalties, and interest. If it is discovered that you intentionally misrepresented or defrauded the government, you may even face criminal prosecution.
We can also provide you with something that a tax professional or former IRS agent cannot — the added value of attorney-client privilege.
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What are IRS Tax Audits?
The purpose of IRS tax audits are for the government to perform an in-depth examination of an individual’s or business’s financial records to verify that income, expenses, and deductions are accurately and honestly reported. The IRS wants to make sure that you didn’t under-report or conceal sources of income and that you were actually taxed on all the money you made, were given, or obtained. They also want to know whether or not you overstated deductions or expenses.
The IRS can audit tax returns that go back three years. However, if you omitted 25% or more of gross income on your tax return, the IRS has the right to audit back as far as six years.
IRS Audits: Reasons You May Be Under Audit
The IRS uses a variety of methods to determine which tax returns they select to audit. One percent of taxpayers are randomly selected. They also use a “document matching” process to see if what you reported on your tax returns matches up with what third parties, such as your employer have reported on your W-2 and 1099 forms. The likelihood of being audited also increases as your income increases. For instance, if you make
There are additional discrepancies or “red flags” that may draw attention to your tax return and trigger an audit
- Failed to file your tax returns and/or owe back taxes
- Failed to report some of your income
- Claimed excessive deductions for charitable donations, home office expenses, or travel and entertainment expenses
- Claimed unsubstantiated amounts of deductions in comparison to your income (self-employed reporting on Schedule C)
- Claimed dependents who don’t qualify (IRS has tightened rules regarding Earned Income Credit claiming children)
- Claimed non-deductible child support and labeled it as spousal support or alimony
- Failed to report foreign investments
You own cash-intensive businesses such as restaurant or convenience store which generate a lot of cash receipts from smaller transactions.
Types of IRS Audits
- Correspondence Audit– With this type of IRS audit, you’ll receive a notice from the IRS saying that they are examining one or more tax returns. The purpose of the notification is usually to request specific documentation to support various line items on your tax return. At Krus Law Firm, we will handle all correspondence with the IRS and send them the appropriate documentation. If you’ve misplaced or don’t have certain documents, we can help you reconstruct your records to demonstrate your earnings and deductions are legitimate.
- Office Audit – A formal meeting/interview is arranged with the IRS tax officials. You will most likely need to bring a laundry list of documents such as bills, receipts, bank statements, credit card statements, canceled checks, etc. The tax audit lawyers at Krus Law Firm will contact the IRS on your behalf to inform them that the audit will be conducted at our offices and we will be your legal representatives.
- Field Audit -An IRS agent comes to your place of business to conduct theirs audit in person. It is best to avoid these if possible.
IRS Audits: Findings and Appeal
If the IRS determines you or your company owe money, you will receive a deficiency notice or audit report and will have 90 days to submit a protest to appeal the decision with the IRS Office of Appeal. The tax audit attorneys at Krus Tax Law will help you navigate the administrative appellate process and will work hard to overturn the audit findings or negotiate a compromise with the IRS. If the case cannot be resolved administratively, we are not afraid to litigate in U.S. Tax Court.